Membership in Co-operative Businesses Reaches 1 Billion

A member of the cooperative Self-Empoyed Women's Association, a trade union that provides support for women entrepeneurs .

The United Nations has designated 2012 as the International Year of Cooperatives, providing a great opportunity to raise the profile of an important organizational tool for spreading human rights and equality worldwide. Membership in co-operative businesses has grown to 1 billion people across 96 countries, according to new research in our latest Vital Signs Online publication.

Co-operatives, or co-ops, are a type of business characterized by democratic ownership and governance. They offer an alternative to the shareholder model of business ownership. Co-ops are governed by their members, who typically invest in the co-operative and have an ownership stake in it, as well as a voice in how the firm is run. Decisions are often made on a one-member, one-vote basis, so in many societies, co-ops provide a much-needed example of democratic governance amid otherwise inequitable conditions.

Unlike more conventional businesses, many co-ops do not struggle financially, because of their emphasis on democratic governance. In 2008, the world’s 300 largest co-ops generated revenues of more than US$1.6 trillion.

Members of co-ops can use their collective power to fight for their common economic, social, or cultural interests: for example, members of a worker co-op might set working-hour limits and wage rates, while members of a financial co-op can access savings, loans, and other financial services that commercial banks might deny them. Co-operatives can play a key role in improving the quality of life of their members, particularly in countries where official protections for workers’ or consumers’ rights are not enforced.

In industrialized countries, consumer co-ops vastly outnumber other types of co-ops; 92 percent of co-ops in the United States are consumer co-ops. But globally, nearly one-third (29 percent) of the largest 300 co-ops are agricultural. This could mean that farmers in a community share the use of tools and machinery to save on overhead costs, or that they use their collective strength to negotiate higher prices for their goods at market.

In the financial sector, co-op businesses are valuable because they are a major driver of rural development, providing economic opportunities to the poorest sectors of many economies.Some 45 percent of the branches of financial co-ops are located in rural areas, for example, compared with 26 percent of branches of commercial banks. A 2010 World Bank report found that credit union branches account for 23 percent of bank branches worldwide and serve 870 million people, making them the second-largest financial services network in the world.

Further highlights from the study:

An estimated 7 percent of Africans belong to a co-operative, and their numbers are growing rapidly. The number of co-ops registered in Uganda, for example, grew 13-fold between 1995 and 2008—from 554 to nearly 7,500. Savings and credit co-operatives in particular are thriving in Africa.

Co-ops can generate a meaningful share of economic output: 21 percent in Finland, 17.5 percent in New Zealand, 16.4 percent in Switzerland, and 13 percent in Sweden.

In some countries, a sizable share of the population—up to 70 percent in Ireland—belongs to a co-operative of one sort or another.